The present invention relates to the process of selling/purchasing a product using a method, which allows both the buyer and seller to influence the price, while also controlling the time the product or service is for sale.
One of the most common bilateral costing schemes, encountered daily by consumers is referred to as fixed pricing. This scheme involves the seller setting a fixed price for the product or service of interest based on past, current and anticipated future market demand. Buyers interested in purchasing the product or service must pay the fixed price. This may or may not take into account the quantity purchased and generally does not take into account the time the purchase is made. While this method provides a simple way for the seller to conduct business with a large number of buyers, it fails to reward buyers interested in buying the product soon after it is available for sale or in quantities larger than one. A common method to reward a buyer interested in large quantity purchases is using a scheme commonly known as discount quantity pricing. This scheme lowers the price associated with the product or service of interest in relation to the quantity the consumer is willing to purchase. This is possible as the fixed cost can be spread over more items, allowing the seller to still make sufficient profit, while offering the reduced price to a consumer. One drawback associated with this method is that consumers interested in smaller quantities are often discouraged by their inability to obtain the lower prices available to large quantity buyers. This results in buyers becoming more and more likely to look elsewhere for a lower price, concurrently resulting in a loss of business for the seller.
Another common bilateral costing scheme is through an auction format. In an auction the seller has the opportunity to set a minimum price, allowing multiple buyers the opportunity to bid against each other for the right to purchase the product. Recently trends in this type of market have been to use an electronic auction system over the Internet such as eBay, Inc. or uBid, Inc. This style of auction provides a great advantage to sellers with small quantities for sale, allowing them to maximize profit, specifically those with a unique product or service which many consumers are willing to competitively bid over.
A bilateral buyer-driven process of bidding has also recently become a popular costing scheme, yielding certain benefits and efficiencies, which other commerce systems cannot. This method involves an individual buyer setting a price they are willing to pay for a product or service of interest. This price is broadcast or published to a multitude of sellers who then have the opportunity to review the offer and if it is satisfactory, offer the buyer an opportunity to purchase the product or service of interest. The most common buyer-driven bidding scheme is described in detail in U.S. Pat. No. 5,794,207 by Walker Asset Management Limited Partnership. As each of the above referenced costing schemes, this method has both advantages and disadvantages depending on the type of transaction. The buyer essentially receives the greatest advantage, as offering any reasonable price to a multitude of sellers will commonly result in at least one seller accepting the bid at hand. Yet the disadvantage associated with this is that buyers are open to the risk of being inundated with a multitude of offers from potential sellers. However sellers are often more willing to sell a product or service at a price much lower than normal, in an effort to move a larger quantity. Additionally, the uncertainty surrounding the acceptance of a buyer's bid can prove problematic for commercial applications where reliable, high-volume transactions are of utmost importance.
Each of these bilateral costing schemes have their respective set of situations where they lend a significant advantage to either the buyer or seller, none truly offer a method in which both parties involved stand to gain a significant advantage in both ease of transaction and maximization of ultimate value.
Methods of volume pricing and utilizing Conditional Purchase Offers (CPOS) have been disclosed in prior art. U.S. Patent Application No. 2003/0126040 applied for by Mesaros discloses a system of volume pricing for use in e-commerce. Mesaros teaches a method of volume pricing where a seller establishes a price structure dependent on the quantity of product or service purchased, which is published electronically to potential customers. The seller proceeds to set the duration of a specific period during which orders for the product or service of interest will be accepted. At the conclusion of the ordering period the price is calculated using the lowest price based on the originally released price structure and the total quantity of products sold.
Walker teaches a method for aggregating multiple buyers utilizing CPO in U.S. Pat. No. 6,466,919. This method involves receiving and processing CPOS to determine if the CPO should be provided to sellers individually or as part of an aggregate CPO. Once the CPO is accepted, whether individually or as part of an aggregate CPO, both the buyer and seller are bound to the transaction
Traditional methods, as well as those taught by Walker and Mesaros lack an ability to account for the period of time taken for a transaction to be completed. A product or service purchased within minutes of the seller introducing the item of interest to the market could ideally sell at a lower price due to the short time period required to market the item. However by the same means, an item, which takes significantly longer to sell, should attract a higher price due to the lengthened time between the introduction of the product or service to the market and the final sale. This could be represented in the form of advertising costs, cost of holding the item in inventory or a variety of other means.